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Thursday Thrust – None From Boeing, That’s For Sure!

The Futures are in great shape (about flat) considering BA is off another $1.60 this morning

This is costing the Dow another 10 points pre-market and this comes after BA was the entirety of the Dow's losses (25 points with BA down $3.50) yesterday, robbing the index of it's sixth consecutive upward close as we followed through with our plan to ignore BA and the Dow and stay bullish.

News came out at 1:45 am that  the FAA is grounding all 787 Dreamliners and that's what we were worried about yesterday, when I said in the morning post:

"NOW we have a problem that changes our investing premise in BA…. So, we won't be "taking advantage" of this dip to add to our entries but we won't be panicking either – we'll just wait for clarity for the moment. "

As we got more information and discussed the BA situation in our daily Member Chat, we decided to wait for BA and the FAA to issue statements.  The FAA grounding is precautionary, of course, but we still need to see what BA's solution is and, more importantly, when they have it.  

Meanwhile, is BA a good deal at $73?  Probably, but we're not as confident as we were on Oct 1st,, when we added BA to our Income Portfolio at $69.  Of course we hedged that by buying the 2014 $65/80 bull call spread for net $9.16 and then, when BA took another dive on 11/15, we added short 2015 $65 puts for $7.50.  Since then, BA has gone straight up but we always have dry powder ready for BA because planes do crash and this stock can drop 30-50% on you very suddenly.

So we're not too impressed by a less than 10% pullback from the top ($78) since the beginning of the year – certainly not enough to go bargain hunting but neither are we worried enough to dump our positions.  After all, it's just a battery problem (so far). 

Unfortunately, as you can see from this Slope of Hope chart, there is not a whole lot of support for BA between here and that 30% drop we worry about.  Fortunately, we are long-term value investors and our initial buy on BA in the virtual portfolio is around net $68 and if BA does fall to $52 (something we anticipated when we bought it), then we'll be happy to double down at that price and end up owning a lot of BA at an average of $60 – because we know we can then sell calls against the position for years to come.  It probably won't come to that.  

Dave Granlund - - Dreamliner 787 problems - English - Dreamliner, aircraft, jetliner, airliner, jet, transportation, passengers, flying, safety, design, plastic,repairs, fire, parts, groundings, airports, FAA, 787, glitchesWhy would we be willing to be "stuck" with BA at $60 a share?  Well, for one thing it's because, in addition to valuing the company much higher than that – even taking into account a 1-year delay on Dreamliner deliveries (not likely), we are also students of history and we know that in March, 1974 the cargo door blew off a DC-10 in flight and crashed the plane and in May of 1979 a DC-10 crashed with damaged hydraulics and in November of 1979 we still don't know why a DC-10 crashed into a mountain, or why in December of 1985 a DC-8 crashed during take-off and in July of 1991 a DC-8 caught fire after take-off when the tires blew out after, just in May of that year, a 767 crashed with thruster problems and in July of 1996 a 747 crashed into the ocean in Long Island and in October of 1999 a 767 crashed into the Atlantic.. etc.

I'm sorry if you are reading this post on a plane but the point is that BA was at a split-adjusted 0.60 in the mid-70s and is up over 100x since then as a stalwart Dow component and they have shaken off many, many disasters before and will shake off more in the future because, overall, there are more than a Million commercial airline flights a year and we have to stretch back to the 70s to list even a dozen accidents.  Flying is very safe BECAUSE they ground a whole fleet of planes over a battery problem.  Imagine if they recalled your car every time one car of your type had an engine fire or a gas leak or a cracked window or malfunctioning door…  So BA is a classic stock that's great to invest in in a downturn and I still like our BA play for a new entry, especially if we hit the same pricing (and BA holds $70 again).  If not, we'll see what adjustments we can make as the day unfolds in Member Chat.  

Meanwhile, housing starts were hot and unemployment was cool so now the Futures are happy again and 13,600 still beckons on the Dow  - we'd almost be there if BA would have taken off instead of crashing – c'est la vie

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  1. BA / Phil: Japan, India, Europe and others have halted dreamliner flights.  This must cost a lot to the airlines; is BA responsible for lost revenue?  If it was a known issue that was not addressed, it could be a real problem….

  2. Cramer on CNBC – "I would not buy BA". His sheeples will be selling this morning.

  3. BA / arivera and Phil – Airbus has some teething problems with the A380 (cracks in the wings) that led to some grounding and added inspection. Following that, Air France asked for compensations:


    Air France (AF) is pursuing Airbus for lost revenues following a number of technical issues with its Airbus A380 fleet, including those related to wing cracks.

    “We are in negotiations with Airbus about compensation for aircraft being taken out of service, in order to partly offset lost revenues,” an AF spokesman said. “The talks are still underway, but the subject is all the more complex given that it concerns all operators.”

    I am not sure what happened to the discussion but I imagine that the same would apply to Boeing eventually.

  4. Oil Lines

    R3 – 96.53
    R2 – 95.61
    R1 – 94.94
    PP – 94.02
    S1 – 93.35
    S2 – 92.43
    S3 – 91.76

    Yesterday's high and low – 94.69 / 93.1

  5. Cramer/jfawcett – well, isn't Phil saying the same thing?  "we're not too impressed by a less than 10% pullback from the top ($78) since the beginning of the year – certainly not enough to go bargain hunting"

  6. Good Morning!

  7. Don't forget that BA is the second-largest supplier to the Pentagon, and the Defense Segment represents about 40% of current revenue streams.   Of course, BA has announced significant cost cuts to this segment in anticipation of defense budget cuts in the future.  However, their strategy of more aggressive ramp-up of commercial aircraft deliveries to offset the Defense Segment decline is at risk with the recents mishaps.  
    It's not so much the grounding of the aircraft operations, as much as any impact on the production line these mishaps may have.  If the FAA deems a more extensive review is required as opposed to isolation and resolution of a part design failure, then months and months of delay will be introduced into the supply chain and production lines, slowing deliveries and impacting revenues and earnings for the next couple of years.  
    At a minimum, this story will take weeks to resolve with the FAA involved as they are, and I would expect the hyenas to start to draw worst case scenarios into the news media shortly.   I would be cautious in any positions taken in BA over the next few weeks, or until the FAA has made some preliminary determinations on the 787 flight worthiness certificate.

  8. Income Portfolio news:

    BA - Again… See Phil's post above!
    CSCO - Downgraded from Neutral to Underweight at JP Morgan.

  9. Cramer and GS pushing AAPL earnings next week……sheeple to the slaughter house???? or……delivering the promised land…..Phil (Oh GURU!!!) your call please

  10. Well said about BA lvmoda… Just like for AAPL with earnings around the corner, there is not much to lose to wait for more clarity before committing money to any one stock especially when investigations are in progress. Who knows what will turn out now.

  11. MACK – going start nibbling on some shares – option spreads are wide.  Write up will follow on them and a  few others to put in the biotech protfolio.

  12. Phil – when we are dealing with deeper ITM FAS calls, the deltas are really screwing up our ratios between shorts and longs – the 3/1 doesn't really work that well anymore. For example, as compared to yesterday morning, our long position gained $100 but our short FAS lost $300. Not much we can do, just an observation.

  13. Cramer and GS pushing AAPL, I wish you would not have told me that, i was feeling so confident about earnings….

  14. Virtual MoMo trade:   BTO 5  EBAY  Feb  52.5 calls for 2.85

  15. rpme,
    burying my head in the sand does't help…….Cramer/GS…grain of salt/grain of Sand!!!! both are irritating

  16. Good morning! 

    Gold having a wild ride this morning – down from $1,680 to $1,665 and back to $1,674 already.  The World Bank gave a weak economic outlook but it didn't stop oil from flying to $95.89 and gasoline popped back to $2.75 despite yesterday's build and that's because OPEC raised their outlook for 2013 demand by 800,000 barrels a day

    The World Bank predicted that global gross domestic product would increase 2.4% in 2013, up from 2.3% last year, but still well below the bank's previous prediction that growth would hit 3%.

    Is OPEC smarter than the World Bank?  Tune in for the rest of 2013 to find out.  Meanwhile, oil (/CL) is an excellent short here at the $96 line but tight stops as you never know where these things will end and, of course, watch out for 10:30 nat gas report and we have that Algeria thing still going on (but that's a silly reason for oil to be up – just an excuse).  

    In our $25KPs, we now have 20 Feb $34 puts at net .92 and they are down to .56 and it costs .34 to roll up to the $35 puts and that's a no brainer with USO at $34.70 as we're buying .30 of intrinsic value for that .34 so let's do that and I love them as a new entry at .98.  

  17. AAPL being pulled to a $500 Friday pin ?

  18. EBAY/lflan,
    I'm confused: Didn't you sell 10 EBAY calls yesterday at 3:45pm?  (STO 10 Jan 19 52.5C)?

  19. CL/Phil,
    I'd appreciate your thoughts on oil.

  20. stjeanluc…..missing trades from MoMo portfolio:   From yesterday    STO  10 EBAY January 52.50 calls  @ 1.70
    From this a.m.   BTO  5  EBAY  February 52.50 calls for 2.85.   Thanks. 

  21. CL/Phil,
    Never mind, lol!

  22. Keep an eye on RIO – they announced a $14Bn impairment (non-cash) and the CEO is stepping down but, so far, little reaction from the stock.  

    3:45AM Rio Tinto sees $14 bln non-cash impairment charge for FY12; CEO Tom Albanese steps down (RIO) 55.03 : Co expects to recognise a non-cash impairment charge of ~$14 bln (post tax) in its 2012 full year results. These impairments include an amount of ~$3 bln relating to Rio Tinto Coal Mozambique, as well as reductions in the carrying values of Rio Tinto's aluminium assets  in the range of $10-11 bln.  The Group also expects to report a number of smaller asset write-downs in the order of $500 mln.  The final figures will be included in Rio Tinto's full year results on 14 February 2013. 

    RIO is a nice stock and will be worth a look if they sell back to $50 (the 200 dma).  Since earnings are before expiration, it's not a bad plan to BUY the Feb $52.50 puts, now .90 – just in case they take a nice tumble on this news.  If not, you can kill them tomorrow for a small loss (as that premise would be blown) but maybe this story gathers steam and they drop $2 and give you a double….  10 in the $25KPs.  

  23. Phil // AAPL
    Went the conservative route you suggested – too much V 
    Jan14 $450's at $42
    You da man – thanks ===

  24. Iflantheman – I thought there were some DECK Puts in the MoMo Portfolio.
    Did these get sold? 
    Do you place stops on any of the positions?

  25. wappler:  Yes, I sold 10 EBAY Jan  19  52.50 calls yesterday.  This converted the trade to a calender spread, as we still own the February 52.50 calls.  This morning I added 5 more of the Feb calls to weight the play more on the long side.  I'll be moving out of the Jan calls tomorrow afternoon. 

  26. The USOs are 43c for the roll, which is a bit more than the net 4c of extrinsic.  Looks like Oil is going to 'go for it', so I will ride out the puts for another day, or until that chart turns my way.  Right now it is running away from the trade.

  27. MoMo / lflan – Sorry I was confused this morning as I thought you had closed the EBAY trade. I didn't see the date! I'll fix it.

  28. julianz……  Yes, but the DECK puts were sold on 1/9, for 2.10 I believe.  I do use stops sometimes.  I have no stops on any positions in the port right now. 

  29. EBAY/lflan,
    I like the calendar idea.  Even if the Jan calls don't quite work out, you can convert Feb into a bull spread even they keep going up.

  30. HOV holding $6 on pullback, worth watching (was $7.43).  

    BA/Arivera – I'm sure they are to some extent.  There are probably some allowances but they don't want to get into lawsuits with their customers (and there are very few Dreamliners in service so far, thanks to previous delays so not very expensive, relatively) so I'm sure they'll be quick to write checks to keep everyone quiet and happy.  CEO of Airbus was on TV praising BA and their quality control and declaring the issue small and that's nice but, of course, he expects the same from BA when the A-380's wings fall off (they already have cracks).  

    Meanwhile, BA far from panic selling at $73.64 with only 4.6M traded – which is one full normal day but also not panic levels – especially when the 1% drop indicates there were very close to 4.6M buyers for 4.6M sellers this early in the day.  We're full in the income portfolio (barring a major catastrophe) with 20 short puts so we're NOT going to be disappointed if we don't get a bigger dip.  If we were earlier in the trade – we'd be wishing for worse.  

    Philly Fed -5.8% – SUCKING!  +5.2 expected but not by people who saw the equally awful Empire Index on Monday (down 7.8) and that certainly didn't hold us back so let's ignore Philly and wait for Michigan Sentiment (76 expected), which is for Jan and might be the last straw if they miss.  

    Meanwhile, bad Philly Fed reminds oil traders why $96 is silly.  

  31. Some interesting housing statistics from The Economist:


    The first gauge is a price-to-rents ratio. This is analogous to the price-earnings ratio used for equities, with the rents going to property investors (or saved by homeowners) equivalent to corporate profits. The measure displays a massive range, from a whopping 78% overvaluation in Canada to an undervaluation of 37% in Japan. The other measure, the ratio of prices to disposable income per person, stretches from a 35% overvaluation in France to a 36% undervaluation, again in Japan.

    America’s housing-market revival looks sustainable in part because the sharp correction in house prices over the past few years has made homes cheap by historical standards. A year ago house prices were still falling, by 3.6%. There has been a turnaround since: the latest data show prices rising by 4.3%. But based on the ratio of prices to rents, houses are still 7% undervalued; judged by the price-to-income ratio, they are 20% below fair value. It also helps that mortgage rates are at historic lows and are likely to stay that way, since the Federal Reserve has promised to keep an extremely loose monetary stance for the next couple of years.

    Looks good for the US markets, but some others are still bubbly!

  32. wappler:   I used the calendar spread to decrease the position size for earnings, and to capture some of the time premium on the options.  The January short calls will protect the position from a short term downturn, and the added 5 long calls this morning will keep the trade profitable if EBAY heads upward today or tomorrow. 

  33. Some perspective on jobless claims:

    Initial jobless claims fell from 372K down to 335K in the last week, hitting their lowest level since January 2008.  Looking at the chart below, it is interesting to note that just as claims spiked and then hit a new multi-year low following Hurricane Katrina, they seem to be following a similar path in the aftermath of Hurricane Sandy.  If the pattern continues, look for claims to rise moderately in the next several weeks.

    The trend is generally going in the right direction and getting close to an historical average actually if you look at the last 10 years. Even during the "Bush Boom" jobless claims were in that range.

  34. AAPL I like the One Trade a lot.  A lot. 
    I know we are looking for wise investments – but with $220 or so in cash by Jan 2015, the 350 Puts seem like a great trade.  I wish i could be like Arnold Rothstein:

    "Write up will follow on them and a  few others to put in the biotech protfolio."
    Where do I find that portfolio?

  36. Cracks/StJ – Right on top of things, I see.  

    Cramer/Scott – Yes, I wouldn't tell people to buy now but no reason to run away either. 

    AAPL turning red.  PCLN with sudden dip (maybe reacting to BA groundings?). 

    Pensions/Diamond – Wow, that is the chart of the day:

    Shows how much room we have to run if money turns around and comes back into the markets – they have the cash – it's just allocated elsewhere at the moment.  Going back to 60% from 40% is a 50% boost – that's gotta make a big difference.

    BA/LV – Caution for sure but, in the long run, back to business at some point.  

    CSCO/StJ – Blasphemy!  Although they are a bit toppy at $21.  Good time to cover with sale of 20 (of 30) of the Feb $21 calls for .70 in the income portfolio.  We might pull them ahead of earnings but we're almost at full value on our longs (2015 $15s) so irresponsible for us not to start collecting some cash.  20 is 6% against the longs in 29 days – that's a nice bonus dividend for a half sale

    AAPL/Jasu – If C'est La Vie doesn't do it for you, how about Que Sera, Sera.  We've made our AAPL bed – time to lie in it.  

    Cramer/Rp – Wasn't Cramer calling AAPL a POS last week (or was that Tuesday?).  How do people take him seriously.  In fact, I caught him lying yesterday because, earlier in the week, he gave a whole premise that he didn't like AAPL because his daughter and her friends had moved on to Galaxy and AAPL was uncool, blah, blah.  Now, that's not true for my kids (10 and 12) who also live in Jersey (and not too far from Jimbo) and we all go to the same malls and the AAPL store is a mob scene, kids and all, while I don't think I've ever seen a kid at any of the many kiosks featuring Galaxy products.  Lo and behold, just yesterday, Cramer is doing his reversal on AAPL and says "my daughter is mad at me because I keep dissing AAPL."  So which is it Jim?  Does your daughter think AAPL is passe – or was that a lie to make your point?  

    I want to do a Daily Show on the Stock Market – just pull clips like that and make fun of the whole thing at the end of the day – I think people would watch it.  

    Meanwhile, 13,600 just one happy bit of BA news away! 

  37. My tab at the top gerry…..

  38. Phil / DIA  it may be a bit late, but any suggestions for my DIA March 124 puts?

  39. Talk about a head fake – gold back to $1,688 now – even higher than the sharp dip.  This is why I annoyingly don't react to things very quickly – it's really not worth it…

    My bad, Michigan Sentiment is tomorrow at 10, not today.  

    Nat gas is in, however is down just 148Bcf, which isn't very much but beating low expectations and forecast is for cold weather next week so nat gas (/NB) shooting up to $3.50, where that now becomes a nice short.  Nothing about that number is supportive for oil at $96. 

    EIA Natural Gas Inventory: -148 bcf. Futures -1.30% to $3.39

  40. CSCO / Phil – Earnings are on 2/6…

  41. Gerry….sorry, I was thinking of the writeups…I don't have a formal portfolio, although, now is as good as a time to try and start another.  I will put it together with the positions that I have.

  42.  historically oil has been highly correlated with global industrial production…and that sucks too..doesn't matter…"we are running out!!!!"

  43.  their is a stealth bubble that nobody sees because valuations are "reasonable"…..but seems to me we are building MASSIVE overcapacity globally due to reckless central bank actions globally….its artificial demand…and it WILL evaporate….then we will be swimming in too much of everything.

  44. I predict AAPL will close under$500 tomorrow for some "mysterious" reason

  45. Some good information on the Dreamliner electrical system:

    Something quite amazing:


    Most of the electricity on the Dreamliner is generated by six generators, two on each engine and two on the auxiliary power unit in the tail of the airplane. Traditionally Boeing airliners used only three. These generators provide electricity for the airplane in a similar way that an alternator provides electricity for your car. Though on the 787, a lot more electricity is generated than in the family truckster.

    The Dreamliner’s electrical system generates nearly 1.5 megawatts, enough to power several hundred homes. With such high electric power demands, the 787 needs high power batteries as an emergency backup power source. Though recently it is the high powered, lithium-ion batteries that have been the source of the emergencies leading to the grounding of the 787 fleet.

    That's a lot of electricty….

  46. GMTA Wappler.  

    AAPL/Wombat – Well I feel much better about that – hope you do too.  If AAPL gets a nice pop, you'll still likely get your $10 loss back quickly.  

    USO/Pharm – The Feb $34 to Feb $35 put roll?  I see .53/.54 and .94/.95 now so yes, .40 with USO at $34.77 but then you are in the Feb $35s, now .94, and the March $34 puts are .97 so I just like the idea of keeping in a position that buys more time AND gains position AND sets us up for the next roll if we have to.  

    Housing/StJ – Doesn't matter much to us in the US – a proper recovery in housing would be a huge boost to our economy.  As smacked down as housing is – it's like re-creating a whole new industry and it includes many small businesses and dozens of suppliers for each home as well as main-line manufacturers who contribute structure, equipment and durables and the labor is all local, so the money circulates in the local economy – nothing better than housing!  Now if only we'd wake up and allow another million immigrants in every year (ones with jobs and places to live) – this country could really start to grow again because we sure aren't growing our own people anymore:

    Job graph very encouraging but we still need to create them.  

    Rothstein/Rexx – I love that clip.  

    DIA/Jyoti – Well, those are pretty toasted at .50.  If you want to keep insurance, the DIA June $120 puts are $1.50 so $1 for that roll and, if you sell some other sucker the March $124s for .50, then it's just net .50 for the roll (and $4 in margin) and you can put a stop on the March puts at .75, which would be about a $3 move down (300 Dow drop – so not likely to happen in a single day) and the June $123 puts (reflecting a $3 move) are $1.97 so you'd still make .20 on the stop out and then you'd have good naked protection which you could then turn into a vertical or whatever (too many possibilities to worry about now).  Just make sure it's worth spending the net .50 to buy another 3 months of protection and we'll talk again in April about the roll to September.  

    CSCO/StJ – That's fine, if they go up after earnings, we have 2 years to roll and our short puts are still $1.30 so that's another buffer we have and it's time to cash those $15s anyway so maybe we'll pick up 2x the $20s and play it from there if we have to (contingent on CSCO popping $21 and forcing us to roll the callers, of course).  

    Oil/Angel – Good article.  Funny how people called me crazy for saying the same thing in 2006.  Suddenly it's obvious to most people that we're not running out of oil anytime soon.  As to the artificial demand – it's all about US housing coming back and leading a global recovery.  If that doesn't pan out – I'm going to get worried.  That's why we should be either encouraging household formation (way down in last 5 years) or allow immigration to double up.  The way the rest of the World is right now, we could pick up a lot of good people from other countries by simply opening the doors.  

    Did you say 1.5 Megawatts!!  

  47. Millions of distressed homes and what news do we get today…

    Builders started work on homes in December at the fastest pace since the summer of 2008 and finished 2012 as the best year for residential construction since the housing crisis began.

    The rebound has not created a lot of construction jobs, however. Despite the increase in starts, residential construction employment was down 1.2% in December from a year earlier, Kolko says.

  48. phil,
    i have been getting pummeled with the fls short call….  i have rolled to present position of short 5 apr145's.  that said im thinking about buying them back and selling an april  150c and 145 p strangle for total of  between .05 adn .50. to work my way out.

    your thoughts on that and would you suggest going out to jul for a credit of 3.00…tks

  49. PSW //
    Theoretical AH Q here. What actually drives premium value and how is it related to VIX ? Is it market dependent  or individual to each equity ?
    I'm trying to sell puts on a number of long holds to minimize loss but theres no premium and hence, risk/reward not there.
    I'm stopping here because Yodi is pretty quiet …

  50. UK FTSE +0.4%
    German DAX +0.5%
    French CAC +0.9%
    Spain IBEX +0.8%
    Italy MIB +1.4%

    Oh Joy.

  51. ST J
    Which contract (feb or March) are oil lines for

  52. Residential Construction – I don't believe we will see a surge in new hires. Just as other industries have shown they can do more with less, so will it be the case for the builders and their subs.
    Before the downturn in '07, builders were already working on keeping many of the major components manufacture "in-house". Job sites started to look more and more like a manufactured home assembly line, leaving many of the subcontractors in the cold…… We would have to see an explosion in demand for that to change.

  53. 34 out of 38 hostages killed in Algeria rescue?  Not exacty surgical.

  54. We're sneaking up to all these new highs while people fret about AAPL and BA.  

    Construction jobs/Kustomz – I think builders are very slow to commit and that's healthy if we keep growing as they won't over-hire or overbuild for a long time.  Most of the builders I know have plenty of excess capacity as they didn't shut down but they were building virtually no houses vs. capacity to build about 1/3 of what they peaked at so big hiring doesn't come until this first wave of homes is in the works and another wave of homes gets ordered.  

    And what 1020 said. 

    FLS/Mill – That's a tough company to short – super-strong all the way.  Are they just naked shorts?  I don't like your solution to turn around and play them not to move more than 3% on earnings – especially when they just popped 10% on nothing much.  If you think they are too high and want to short them, then short them but it's a good company with good growth in an improving economy so I'd be really careful either way.  If you don't like the space – maybe better off playing CAT not to cross $100 or CMI to top out at $120 but, with a big rally, all could be heading higher if the Dow pops that 13,600 mark. 

    Premium/Wombat – That's like a whole class but VIX is one of the things that is used to determine volatility.  A lot of is is parimutuel, like horse-racing, and depends simply on what kind of expectations other people have for strikes at various months but some of it is set by the Options Clearing People but, once a strike is set – the free market has at it.  Each stock has it's own internal VIX but the overall VIX is a big factor.   Selling puts doesn't hedge losses on stocks – it increases them so be careful that you have the right idea there.  

  55. Oil Lines / Bertl – March.

    It's getting to be a pain because TOS switches their front month on a more erratic schedule.

  56. zero – Can it still be considered a "rescue"?…..

  57. 1020:  "Kill them all, God will recognize his own."     Arnald-Amalric, 1208 (when asked by the Crusaders what to do with the citizens of Beziers who were a mixture of Catholics and Cathars)

  58. Fitch: Stable Outlook Reflects Boeing's Substantial Liquidity, Debt Reduction

  59. Angel:    The BP study suggests that gas masks and air filtration systems, and hurricane-proof bomb shelters may become the fashion accessories of 2020:   "[BP published a study predicting oil production will increase substantially, and that unconventional and high-carbon oil will make up all of the increase in global oil supply to the end of this decade, with the explosive growth of shale oil in the US behind much of the growth.    As a result, the oil and gas company forecasts that carbon dioxide emissions will rise by more than a quarter by 2030 – a disaster, according to scientists, because if the world is to avoid dangerous climate change then studies suggest emissions must peak in the next three years or so."


  60. Still a little Cathar blood in my veins from my mother's side Zero… Didn't kill them all!

  61. The WSJ shows you the brutal treatment of the struggling top 1% following the tax hike in a simple graphic:

    Kevin Drum takes them to task!

    How many single mothers make $260K?

  62. Stj:  The Cathar streak is undoubtedly responsible for your enlightened viewpoints!

  63. Housing
    The Gov. of our state put forth his budget yesterday and it includes the elimination of the mortgage interest deduction. If this passes, it probably won't be good for housing here.

  64. Thanx ST J

  65. How long before we get a reverse split in TZA.

    The January effect is said to affect small caps more than mid or large caps. This historical trend, however, has been less pronounced in recent years because the markets have adjusted for it

    Read more:

  66. Pharm / AVEO what is your outlook for AVEO in the medium term?

  67. At the open: Dow -0.17% to 13511. S&P +0.02% to 1473. Nasdaq 0% to 3118.

    Treasurys: 30-year -0.34%. 10-yr -0.14%. 5-yr -0.07%.

    Commodities: Crude +0.49% to $95.14. Gold -0.09% to $1681.65.

    Currencies: Euro +0.6% vs. dollar. Yen +1.04%. Pound -0.12%.

    10:00 AM On the hour: Dow -0.17%. 10-yr -0.14%. Euro +0.60% vs. dollar. Crude +0.49% to $95.14. Gold -0.09% to $1681.65.

    11:00 AM On the hour: Dow -0.17%. 10-yr -0.14%. Euro +0.60% vs. dollar. Crude +0.49% to $95.14. Gold -0.09% to $1681.65.

    12:00 PM On the hour: Dow -0.17%. 10-yr -0.14%. Euro +0.60% vs. dollar. Crude +0.49% to $95.14. Gold -0.09% to $1681.65 - Ticker must be broken!  

    Market Preview: U.S. stock futures get a boost from strong jobless and housing data, with the S&P benchmark +0.4%. Boeing is-1.7% as its Dreamliner woes pile up, although Rio Tinto is just-0.25% despite taking a $14B charge and losing a CEO. CBS is +9%after news it plans to convert its outdoor advertising business into a REIT. Following earnings, eBay is +2.4% but Citigroup is -2.5%.Later: Philly Fed Business Outlook, Fed's Lockhart 

    Another day of outperformance by the small caps (IWM+0.5%) has the Russell 2000 at a new all-time high of 888. The mid-caps (MDY +0.6%) post an all-time high as well. Despite John Bogle's aversion, small-cap stocks do tend to offer better returns over the long haul.

    From the Department of You've Got To Be Kidding, Fed (and other central bank) officials are voicing concerns about overheated markets – be they junk bonds or farmland or houses. This week, Atlanta Fed president Lockhart noted a bit of froth in Treasurys and MBS. Fed purchases of $85B/month in those markets couldn't have anything to do with that?

    Dallas Fed President Richard Fisher yesterday called for the break up of a dozen too-big-to-fail banks, each with assets of over $250B. While Fisher didn't name all 12, he showed a presentation slide with a list of the top five banks: JPMorgan (JPM), Bank of America (BAC), Goldman Sachs (GS), Citigroup (C) and Morgan Stanley (MS). Fisher believes his position is receiving rising support in the Fed and Congress.

    More on Fisher: He also believes that the federal safety net should only cover the commercial-bank unit of a bank's holding company, and not its shadow banking affiliates or the parent company. Meanwhile, Fisher thinks that QE is "having a lesser impact as we go through time." While mortgage "rates are the lowest they have been in a lifetime…they have not come down as quickly as I would like."

    Investors are starting to come into equities, says Michael Price, as they realize valuations compared to bonds are so much better. Price's real talent lies not in macro calls, but in value stocks, and he's big fan of McGraw-Hill (MHP), particularly the S&P side once it's split off from the education business. Another pick is FXCM, where trading activity is picking up and higher interest rates could really start to boost earnings

    A few bulls drop off of the AAII Investor Sentiment Survey, with the percentage down 2.5 points to 43.9%. Rather than turning bearish, they moved to the Neutral camp, which gained 2.1 points to 28.7%. Bears were about unchanged at 27.3%. A longer term chartfrom Ryan Detrick shows bullish sentiment elevated, but not extremely so.

    The Bloomberg Consumer Comfort Index slides again, dropping to -35.5 from -34.4 last week. It's the lowest read since early October. Mid-January dips are common, note the authors. Less common, however, is a bump in taxes, and that's what everyone is seeing in their initial paychecks for 2013.

    December Housing Starts: 954K vs. 890K forecast, 851K previous.  More on Housing Starts: It's the fastest read since June 2008, and 36.9% above the pace a year ago. Building permits come in at 903K, about equal to November and 28.8% above a year agoLonger-term chart from Bill McBride. The 10-year Treasury yield +8 bps to 1.87%. S&P futures +0.4%.

    The average rate on the 30-year fixed-rate mortgage declined to 3.38% in the past week from 3.40%, Freddie Mac says in its latest survey. A year ago, the 30-year rate was at 3.88%. The 15-year fixed remains unchanged at 2.66%. "Mortgage rates were flat to down a little this week amid reports that inflation remains contained," according to Freddie's chief economist. 

    From here forward, Bank of America (BAC) and its TBTF brethren will have to make money through operations. Reduced provision for credit losses added about $7B to income in 2012 (vs. total income of $4.2B), but provisions now stand at $2.2B, giving far less room for additional earnings boosts. Shares -1.5% premarket. (earnings)

    Citigroup (C): Q4 EPS (excl. excluding CVA/DVA and respositioning charges) of $0.69 misses by $0.27. Revenue of $18.2B (excl. excluding CVA/DVA) (+8% Y/Y) misses by $0.9B. (PR)  More on Citigroup (C) Q4 earnings: New CEO Tom Corbat "kitchen sinks" the quarter to clear out the decks for his tenure as Citi becomes the only major bank to report a big miss on the bottom line. "(Earnings) reflect an environment that remains challenging, with businesses working through issues like spread compression and regulatory changes as well as the costs of putting legacy issues behind us." It's been awhile since a bank chief sounded so dour. Shares -4.5% premarket. (PR)

    Italy's Mario Monti is drawing jabs for proclaiming the EU crisis over, but maybe the best gauge – the euro/Swiss franc cross – agrees. Now buying CHF1.2480, the euro is at its strongest vs. the franc since before the 1.20 floor was imposed by the SNB in the midst of a very dicey summer 2011.

    More watts:  Trina (TSL +2.6%) trades higher after announcing it hassupplied 61MW of modules for a German solar project. Given the current state of European solar demand, Trina can use all the good news its can get on this front.

    Honing in on our action:  Plans for a covered-call Gold ETN are unveiled by Credit Suisse just days after the bank sold its European ETF business to iShares. The fund will hold GLD and try to boost returns – and provide downside protection – by selling "out of the money" calls against it. The launch could come as soon as this month. 

    New Rio Tinto (RIO) CEO Sam Walsh is given a cautious welcome by the market, as shares move off early lows in London trading, now -1.3% - substantially less wiped off the market cap than the $14B writedown that played a part in Tom Albanese's ouster. Some see the weakness as a buying opportunity; Citi upgrades RIO to Buy from Neutral, believing the shakeup "could significantly realign Rio Tinto with shareholder interests through reduced M&A and reduced capital expenditure spend." 

    Initiating coverage on the "North American Agricultural Sciences" sector, Credit Suisse declares itself a fan of some, with Agrium (AGU), Monsanto (MON), and Potash (POT) all rated Buys.MOSCF, and IPI are rated Neutral, with Compass Minerals (CMP) started at Sell on worries over the implementation of cost-cutting. All of these companies are holdings of MOO+4,5% YTD.

    Standard & Poors says Boeing's (BA -1%) ratings and outlook have not been affected by the recent FAA grounding. The agency doesn't believe the action will result in a material impact to Boeing's credit quality over the near term, and the company has ample liquidity to address the costs of fixing the problem. However, it adds one caveat: Depending on how complicated the problem is to fix, it could limit BA's ability to increase production and reduce expectations of significant improvement in cash generation in 2013 and beyond.

    Herbalife (HLF) expects Q4 EPS of $1.02-1.05 vs $0.86 last year and consensus of $1.01, and revenue growth of 19.9% from $884.57M last year vs Street forecasts of 17.8%. Shares -2.2% premarket. (PR) More on Herbalife (HLFguidance: Volume points are seen +18.4% in Q4, with all six of the company’s regions expecting double-digit growth. 2013 volume point guidance remains unchanged, although costs are likely to increase temporarily following "recent events." Expects to start buying back stock as part of an existing share repurchase authorization. (PR)

    Deckers Outdoor's (DECK -2.7%) plan to introduce a lower price entry point for its fashions could help it drive conversions higher, according to retail analyst Leah Vermulen. The company's strategy was unfurled as part of its presentation at the ICR XChange Conference. The bulk of the comments from execs pitched the strength of the Uggs brand and covered the company's retail expansion plan (200 stores by 2015). 

    Heard during SodaStream's (SODA) presentation at the ICR XChange Conference: 1) New innovation is on tap for the company, particularly with its Aquabar machine. 2) Sees the upcoming Super Bowl advertisement as well-timed with the company's North American reach dramatically increased. 3) New markets in India, Mexico, and Brazil look promising. 4) Acquisition costs are declining, not rising as some analyst reports suggest. 5) Execs note the Costco and Sam's Club partnerships are seasonal and say SodaStream is exploring grocery channels. (webcast)

    Flying since our entry:  Rite Aid (RAD +1%) says it obtained more than 400K additional flu shots in order to respond to increased demand stemming from the national flu outbreak. To date, the company has administered more than 2M flu shots this season at $29.99 a pop. Over the last month, shares of RAD have jetted 49.5% higher.

  68. Any like a specific GOOG EARNINGS PLAY?

  69. More from the UnitedHealth (
    UNH +0.6%earnings call: 1) medical membership +600,000 in January. 2) sees EPS near the "top side" of its $5.25-$5.50 forecast and doesn't have negative light for 2014 EPS outlook. 3) 2013 pricing and markets have been betterthan in 2012 and expects medical costs to rise 5-6% this year. 4) doesn't foresee a dramatic effect on membership from exchanges. (Webcast)

    Shares of Intuitive Surgical (ISRG -2.2%) dip on a Citron Research report claiming the company has made "outrageous marketing claims" that leave it exposed to legal backlash. It goes on to accuse the robotic surgical device maker of failing to adequately disclose the number fatalities and injuries due to da Vinci procedures, and the actual reasons for "such adverse outcomes." - And they're up 2% now, go figure

    Jefferies is out with a forecast on what gains or losses cable companies will report for basic video cable and high-speed Internet subscribers in Q4. Net adds for basic cable: TWC -140K,CMCSA -12K, CHTR -38K, CVC -10K. Net adds for high-speed Internet: CMCSA +369K, TWC +140K, CHTR +80K, CVC +5K.

    Micron (MU +2.5%moves a step closer to owning Elpida after a U.S. bankruptcy court signs off on Elpida's IP licensing deal with Micron and $15M patent sale to Rambus (RMBS +1.2%) over the objections of U.S. bondholders. The decision comes less than 3 months after a Tokyo court approved the Micron-Elpida deal and dismissed an alternate proposal from bondholders. Elpida creditors have until the end of February to vote on the Micron deal. (previous)

    FU JPM!  Cisco (CSCO) is downgraded to Sell with $18 price target at JPMorgan. Positive investor sentiment on the stock "(has) gotten ahead of itself" given the sluggish enterprise spending environment. "Investors should be using Cisco as a source of funds from current levels." Shares -1.5% premarket. - Oh, actually that's pretty good advice and what we did.  Turns out it is a well-timed, smart call

    In addition to downgrading Cisco, JPMorgan is upgrading (I,II) Juniper (JNPR +3.3%) and Infinera (INFN +6.6%) to Overweight. The firm sees improving 2013 carrier capex, new routers, stock buybacks, and "a proactive focus on operating leverage" aiding Juniper, which is about to partly upend its business model in an effort to embrace software-defined networking. Infinera is expected to benefit from rising demand for 100G optical gear and its high-endDTN-X system, which now has 5 tier-1 carrier clients. Separately,Infinera discloses sales chief Ronald Martin is leaving, while assuring investors there's no change to 2012 guidance.

    Intel's (INTC) Q4 earnings are due out later, with analysts expecting that EPS fell to $0.45 from $0.64 while revenue dropped to $13.52B from $13.89B. Intel is struggling to overcome a falling market for its PC chips and the European economic slump, although it is benefiting from a shift to new data-center technologies. The chipmaker is also about to lose departing CEO Paul Otellini, but analysts don't expect an announcement about his successor today.

    Amazon (AMZN) may have seen softer sales in states where it started to collect sales tax, according to analysts. Data dug up by ChannelAdvisor indicates Amazon's sales in California fell well-below the pace of other states starting in November before recovering a bit toward the end of the holiday selling season. What to watch: Amazon reports Q4 earnings on January 29 with a spotlight on if the "tax effect" will have a significant effect on overall result.

    Three lunchtime reads:
    1) Six 'safe' moves that put you at risk
    2) The safe asset shortage
    3) Gold breakout in process, thanks to Germany

  70. Phil //
    $RUT @ 888 ATH
    Any adjustments to TZA ? or are we buckled in for mid year 

  71. oh, and FB takes a swing at the server farm

  72. Oil zooming to $96.40 in dead hostage news (Rent-A-Rebel back in business).  CNBC already on the $100 bandwagon – spinning yesterday's oil report as "a surprise fall in crude inventory" – I kid you not (see yesterday comments for details on oil).  We're making no sense at all as Brent is coming down and WTIC is up:  

    Also, you can see from gasoline, which they have to sell at the pump, vs the pits, is also diverging down away from oil by a lot:

    So, conclusion that oil is being jacked up but hard to say when it ends so we can only roll back short positions or stop out.  Signs so far favor sticking with the short trade.  

    Emissions/ZZ – It's always something.  

    How many singles make $260K/StJ – In NYC, you'd be surprised.  

    LOL – Now gold spiked to $1,699.50.  Dollar 79.76, not it's fault.  

    TZA/Kustomz – Usually, they wait until one of the ETFs is under $10 or $5.  Getting there.  That's often a good time to place a bet as and adjustment back to $60 (1/10 split) would then mean a 5% drop in the RUT would be 15% on TZA and a $9 gain vs a 0.90 gain from $6 (if that's where it splits).  

    GOOG;/Itrade – Big deal on GOOG is going to be mobile search.  Doubt there is much growth in desktops. Earnings are on the 22nd (next Tuesday) and don't forget Monday is a holiday so I kind of like the June $665/700 bull call spread at $21, selling the next week $725 calls for $15.50 for net $5.50 and the plan would be to roll those Tuesday (hopefully picking up some premium crush over the long weekend) and sell Feb calls to cover, hopefully for another $5 to make a net free spread.  If GOOG has good earnings, we can deal with it by rolling and if GOOG has bad earnings, the caller goes worthless and it's a free(ish) spread and we can salvage what's left or sell puts and roll down if we think it bounces back.  Let's do 3 of these in the $25KPA as it will be a good thing to follow along.   

    TZA/Wombat – No, you can't go adjusting every couple of % – you''ll not only go nuts but go broke paying broker fees.  

  73. Phil // TZA  copy that.  April $16/ July 12 Bull call spread ( would that be calendar ? spread ), $10 Feb puts sold 

    "Selling puts doesn't hedge losses on stocks – it increases them so be careful that you have the right idea there."
    Yep. it was poorly worded. I have a stock ( naked short ) that I've been killed on. I was reading last night that a strategy for hedging a short position would be selling puts. That's what I meant.

  74. TZA/Wombat – Keep in mind it's a disaster hedge, insurance you expect to lose – HOPE to lose if you are properly bullish.  It's kind of like life insurance – you don't hope you die and you don't keep buying more as you get older.  Well, as our bullish positions rise 10%, then the profits are already covering a 10% drop, aren't they?  The insurance needs to be adequate – not trying to cover 100% of all potential losses or you end up in a zero-sum game.  With the indexes, keep in mind that we still need Dow 13,600 to confirm because it's very unlikely that the other majors are going to pop 10% (RUT already did at 880) if the Dow can't even crack it's 0% line.  

    I often say to Members, you have to think of a lagging index (this also works with sectors etfs and their components) as a barge with various tugboats attached.  So you have the Dow being dragged around by the RUT (up 10%) and the S&P and the NYSE are over 5% and helping but the Nas boat is up less than 5% and not helping much.  BA is a smaller boat but it's dragging the Dow the wrong way at the moment and, if there's too much pullback from the Dow, the other boats that are attached to it may get dragged along with it, rather than getting the Dow to move with them.  

    That's what's key about these resistance levels – they let you know where to expect trouble and, once over them – hopefully it switches to support.  If the other indexes run too far ahead of the Dow (and 10% is too far) then the rope are stretching and, if they can't pull the Dow over resistance (13,600), the line may snap them back towards the Dow and not vs. vs.  

  75. From Gann360…..FWIW

  76. Phil/GOOG – With Vol being pushed up into earnings, could one also construct a longer-term trade on the same mobile-search premise? I was looking at the following:
    2014 $680/720 bull call spread at $20.10, selling the 2014 $575 puts for $21.50 for a net credit of $1.40
    Net entry on GOOG would be $553.50 (below its June 2012 lows).

    I'm not looking to put on this trade – just for educational purposes only. Thanks.

  77. Nice rally call Phil, been minting money this year.  Do you think we have legs or is your tug boat example a cautionary tale?  Thanks for all the great trades, just let me know when to cash out and I'd be much obliged.  

  78. AVEO – no changes for now.  Biotech Portfolio is below.  This is by no means extensive, but many of my positions are in here…and I have lots more….lots…

  79. Markets betting on good #s out of China tonight.

  80. Speaking of reverse-split, it looks like we'll have to reverse split VXX by June now! We went from $35 to $25 in 2 months! I am guessing $15 in April and $10 by end of May at which point, bingo….

  81. If you want good numbers out of China, China will give you good numbers!

  82. GOOG/Opes – You could go that way but those 2014 $575 puts net out to $5,700 of margin (non-PM) per contract and that's AFTER taking in the $21.50.  So, you have paired it with an aggressive bull call spread of $680/720 and what happens if GOOG drops 10%?  The $680/720 spread will be worth about what the $750/790 bull call spread is ($16) so down $5.50 there but the short puts will now be about what the $645 puts are ($42) so now it's a $21.50 loss there and a $5.50 loss on the spread is down $26 on a 10% drop in GOOG and the margin on the $645 puts is $103 and now it's not offset by cash as you have a net loss and no more net credit.  

    So your margin jumps 4x and you are down 100% on a 10% drop in GOOG.  If you are ready, willing and able to ride that out, that's one thing but it's still very risky (and too risky as Opesbridge is our hedge fund, folks and we already have AAPL as our tech risk) whereas my trade idea is a direct play on earnings and can either make you that same $40 much much sooner (go 2x on that play) and, since we're not even selling short puts yet (but some short calls that are hedged by our long position), we have much less margin requirement and plenty of room to adjust, whichever way GOOG goes.  

    Thanks Bruce.  As I said above, it's all about the levels and I know it seems like I do, but I don't make predictions – I just observe what's going to happen when it seems obvious and (and here is the big trick that my fellow prognosticators don't seem to get) – when I'm not sure – I DON'T PREDICT.  Only talking about things I'm sure of helps me be about 60% right which, very sadly, is about 20% righter than the average idiot who predicts the markets.  So we're cautious because we're at the top of the range I "predicted" we'd get to because there was simply no reason for us not to get to it with QInfinity and the Fiscal Cliff "fixed."  So far, earnings have given me no reason to bail and the Debt Ceiling is too silly to worry about this early.  Other than that, we're just watching to see what happens.  

    VXX/StJ – Didn't they just reverse-split it last year?  

    China/DC – Wasn't really newsy this morning but:  

    Default Alarm Rings as Trust Loans Jump Sevenfold: China CreditA seven-fold jump in last month’s lending by China’s trust companies is setting off alarm bells for regulators to guard against the risk of default. So-called trust loans rose 679 percent to 264 billion yuan ($42 billion) from a year earlier, central bank data showed on Jan. 15. That accounted for 16 percent of aggregate financing, which includes bond and stock sales. The amount of loans in China due to mature within 12 months doubled in four years to 24.8 trillion yuan, equivalent to more than half of gross domestic product in 2011, and the People’s Bank of China has set itself a new goal of limiting risks in the financial system.

    Nearly $1 trillion of debt at risk of downgrade to junk in 2012-S&PThe amount of sovereign and corporate credit on the cusp of being downgraded to junk status more than quadrupled in 2012, due primarily to an erosion in the credit quality of the world's banking sector, Standard & Poor's data showed on WednesdayAt the end of last year, S&P rated $984.8 billion worth of debt, from 52 separate issuers, one step away from speculative grade, also referred to as junk. At the end of 2011, the number of credits that were one downgrade away from junk status was 38, representing $227.4 billion. "Most of the downward pressure that affected potential 'fallen angels' was because of the European credit crisis," Diane Vazza, credit analyst at S&P, told Reuters, referring to issuers whose ratings are close to being cut to junk.

    Chinese Dump Equities as Foreigners Rush in: Chart of the Day. Chinese regulators are accelerating approvals for overseas firms to buy the country's securities at a record pace as local investors abandon equities. The State Administration of Foreign Exchange awarded $15.8 billion of quotas for qualified foreign institutional investors to trade stocks and bonds in 2012, according to regulatory data compiled by Bloomberg. That's more than the previous five years combined. Stock accounts containing funds fell by 1.75 million to 55.2 million last year, the first annual loss since at least 2008.

    U.S. Quantitative Easing May Lead to Global Price Rises. Several rounds of quantitative easing by the U.S. may lead to rises in global commodites and capital prices, Chinese Academy of Social Sciences researcher Gao Haihong wrote in a commentary.

    Europe drawn into global currency wars as slump deepensThe world is edging closer to all out currency conflict as Europe’s politicians join a chorus of policy-makers across the globe pushing for devaluations to fight for market share.

    French Business Failures Rise 12.5% in Fourth Quarter. More than 16,000 failures registered, a rate not seen since the worst moments of the fiscal crisis, citing a report by business information group Altares. Failures are 12.5% higher than the year-earlier quarter.

    Abe Stimulus Risks Fizzling as Citigroup(C) Sees Japan Job Gap. Japan’s 10.3 trillion yen ($117 billion) fiscal stimulus may add less than a quarter of the jobs the government predicts, casting doubt on Prime Minister Shinzo Abe engineering a sustained recovery. Even with more central bank easing, most of the impact of Abe’s spending won’t spread far beyond public works projects, Citigroup Inc. (C) says. It estimates that 100,000 jobs will be created, compared with the government’s figure of 600,000. BNP Paribas SA (BNP) says 150,000.

    Singapore Exports Drop Most in 14 Months as Recovery Delayed. Singapore’s exports declined the most in 14 months in December as manufacturers shipped fewer electronics and pharmaceuticals, hurting economic recovery. Non-oil domestic exports slid 16.3 percent from a year earlier, after a revised 2.6 percent drop in November, the trade promotion agency said in a statement today. The median of 18 estimates in a Bloomberg News survey was for a 7.6 percent decline. The drop was the most since October 2011, based on previously reported data. Exports rose 0.5 percent in 2012, the worst performance in three years, according to Bloomberg calculations. “The ugly export reading raises the specter of recession once again,” Chua said. “There is a high likelihood that industrial production also contracted sharply in December. These are signs that Singapore’s manufacturing is facing hollowing out pressures, especially given the better trade data seen in Northeast Asia and Malaysia.” Singapore’s electronics shipments by companies such as Venture Corp. fell 19.1 percent in December from a year earlier, after slipping 16.5 percent the previous month.

    Container traffic at L.A., Long Beach ports up slightly in 2012. Experts anticipate that 2013 will bring overall slow gains in trade.

    Why Brazil's Once-Booming Economy Is Losing Its Shine. "The last decade was very good for Brazil," James Lockhart Smith, head of Latin America, Maplecroft, told CNBC. "Now, Brazil is having to compete with a lot of other countries and it has an Achilles heel in the cost of doing business, so it's much more complicated to generate growth."

    You guys have no idea how much crap I read every day that I don't bother sharing, as I try to just pick things that are relevant to things we are trading (and that have clear indications of trends we can follow).  The above is just a jumble of foreign noise that I didn't find very helpful but – it is worth noting in the context of waiting for China numbers so we have a little background as to whether or not the numbers line up with reality.  

  83. China should be fantastic, as everything from Philly and NY was shipped there…..according to the manufacturing numbers.

  84. AMRN up -heavy call activity.

  85. VXX / Phil – Yes, they reverse-split last October I believe. That has worked well so far. That instrument is only really good to sell. I have these Jan 15 20 put that I was hoping would be worth $10 in 18 months but now it's looking like less than 6 months when VXX is at $10 again. I might be able to repeat the same technique twice with the 2015 options.

  86. Phil/Goog – Got it. Thanks!

  87. DC — "Chinese investors dump equities while foreign investors rush in."  Ignorant Chinese don't understand how much free money they're leaving on the table for those better-informed overseas investors, I reckon.

  88. Here is the link with the biotech Portfolio…..I think it is updated for now.

  89. I can't believe the Dow's at 13,600 and AAPL is at $505.  Remember when they were talking about putting AAPL in the Dow?  That was at $700 and the $200 drop at 8 points per Dollar (Dow is not cap-weighted) would have cost around 1,600 points!  As it is though, 13,361 was the tippy top in October but we closed about 13,320 and that was our only day above (with a cliff dive after).  So a day above tomorrow, into the long weekend, would be a huge victory but, first, we have to close above today. AAPL was about $666 at the time and the Nas was 3,196 at it's high so very strong if you ignore AAPL's 6% drag on the index.

    So, we're much stronger internally on the Nas now than we were then and, hopefully, that means we don't have an air pocket underneath us.  The way we made these gains (the hard way) vs. the series of one-day pumps each week (mostly pre-market) that took us up last time is also way different but, still, until we're over our levels for a couple of days – this is where we need to be most cautious of a reversal.  

    VXX/StJ – It's essentially designed to fail.  As are most ultras.  

    You're welcome Opes.  

    China/ZZ – The Chinese have been screwing over foreign investors for 400 years now – don't be so sure they didn't already take that free money and now they are running before someone takes a good look at their books.  

  90. Going through that biotech portfolio, for an IRA, WCRX is a nice little dividend payer, and one can sell the front month calls for extra umph…..

  91. CLDX….selling Feb $7 puts.  Also, buying a few Aug 8/12 BCSs.

  92. 80c for the BCSs.

  93. Phil:  I tried not to cross over from the ironic to the sarcastic not to be vulgar, sorry.  The Italics were meant to help out the humor-impaired. :)

  94. Pharm  Thanks for the iwm idea yesterday!

  95. IWM…yes, I picked that up from another service…..not too shabby.

  96. GLD….still in the March 170s.  Buying some March 174s as well.  Gold is gonna rock, literally!

  97. Sarcasm/ZZ – Oh, we don't get that around here. 

    Daryl Cagle - - National Buffoons COLOR - English - Republicans,gun,pistol,handgun,debt ceiling,deficit spending,dog,shoot,kill,National Lampoon,magazine,Debt Ceiling

    Pat Bagley - Salt Lake Tribune - NRA Child Safety  - English - NRA, LaPierre, Wayne, Children, Sandy Hook, Obama, Guns, Secret Service, Newtown, Armed, Guards, Sasha, Malia

    David Fitzsimmons - The Arizona Star - guns - English - guns

  98. AAPL….yes, 500 pin tomorrow.  Unreal.  Gann is a pretty good chartist…..and all the voodoo that goes with it.

  99. Rocky ride but oil back to $95.79 at the moment.  Gold holding $1,687.  

    By the way, good clue that $2 rise in oil is BS (>2%) is XOM up 1% and XLE up 0.79% and OIH up 0.4% – they don't believe it's going to last so why should we? 

  100. I bought AAPL hoping for a 520 pin

  101. GLD/ Pharm:  Funny- i just rolled down and out on the March 170's to June 162's. i couldn't remember who put that on…

  102. TRIN is >1.4.  There is selling going on….somewhere.

  103. Look at INTC go, up 3.5%, this is before the numbers. Crazy.

  104. Gun Control / Phil  Don't know if you showed this before, but this is my favorite Jon Stewart gun control show—gun-control

  105. Oh, by the way – I must say I was flipping channels last night and Farenheit 9/11 was on and I watched it and it's a whole different movie in retrospect as we now KNOW the administration was lying vs. Michael Moore's "wild accusations" at the time.  It really is a fantastic documentary and a lot of it is tough to watch but it should be mandatory viewing for anyone who wants to take on the responsibility of voting.  

    Damn, we lost 13,600 right at the bell.  Bastards!  Still a very good day with Dow volume settling around 175M, so a 50% better day than we've been having and making new highs while we're doing it – that is not bearish.

    INTC earnings looking good.  

    Krauthammer/Jabob – What's to think?  He regurgitates the standard arguments.  We have charts (no, I'm not going looking for them) that showed very clearly that video games have no correlation at all to gun violence – not even a tiny bit.  Yes, we treat mentally ill people deplorably and, since it's so easy for them to get a gun – kaboom!  No Nobel Prize for figuring that out (and that's not even the point he was trying to make).  As he says, there have always been crazies but, before there were assault weapons – not one person was killed by an assault weapon – EVER!  Why is it such a stretch to conclude that, if we take away assault weapons, no one will ever be killed by them again?  By the NRA's logic – I should keep a little sarin gas with me – just in case I ever need to even the odds in a chemical weapons fight…  And, if everyone started carrying around sarin gas – what do you think would happen?  Someone would kill people with sarin gas – because that's what people do – they kill other people sometimes and they do it with whatever is around.  So we don't like that idea and we don't allow people to buy chemical weapons and, guess what – A MIRACLE – no one has gone crazy and taken out a school with chemical weapons – even though we can do so in countless video games and the instructions are right there on the web – people don't do it because it isn't readily available.  So, I know this is a really tough leap of logic for some of you but – take away the weapons and then the weapons won't be used in crimes.  

    And what Arivera said! 

  106. Damn Arivera, that guy at the 7-minute mark is exactly WHY I want to take the guns away – what a loon!  

    You're very welcome Jabob.  

  107. Phil: Can just imagine 7 minute crazy dude with assault weapon protecting our schools!

  108. If I am reading this right, HOV has 135M shares outstanding and 54M shares traded today. Mostly in the last 15 minutes. The average for a day is just over 9M. I wonder what's going on?

  109. ariveraA--that was awesome!

  110. FAS Money:  Not to be a Debbie Downer or anything, but curious as to the plan for the $130 caller.  It is looking like it has a BMI of 30+…..

  111. They release the #s (good) early on INTC, all the while pumping it higher as they get out ahead of guidance (bad). What a bunch of crooks.

  112. Video games and guns / Phil – And here is the chart:

    No correlation whatsoever… but we can't let facts gets in the way of a good talking point!

  113. INTC…giving up all those wonderful gains today, and yesterday's as well….  Ah, capitalism.

  114. Phil thoughts on COF?

  115. SPY - SPDR S&P 500 ETF – A large trade in SPY call options, one that comprised more than 15% of the 630,000 options contracts that had changed hands on the ETF by 11:05 a.m. ET on Thursday morning, appear to be a massive bullish play that looks for the S&P 500 Index to rise to fresh five-year highs next week. Shares in the SPY, an ETF that tracks the performance of the S&P 500 Index, are moving higher for a third consecutive session, up 0.45% at $147.71, helped by a decline in initial jobless claims, strong housing starts and better-than-expected corporate earnings reports. The outright purchase of 100,000 calls at the Jan. 25 ’13 $150 strike at a premium of $0.165 per contract benefits from continued gains in the price of the underlying fund during the next six trading sessions. The position may be profitable at expiration next week should SPY shares tack on another 1.7% to top the effective breakeven price of $150.165, the highest level since 2007.

  116. Pharm—Thank you very much for the SGEN trade—got out of it today—will wait to get back in

  117. China’s economy grows more than expected

  118. ariveraA — Good JStewart video.  A lot of information in it that is not widely disseminated.  I didn't realize the ATF barely exists from a competent enforcement standpoint.  I'm not in favor of banning fast cars or alcohol consumption, but I'm very glad that drunk driving laws are strictly enforced.  Safeguarding the lives of innocents in the U.S. will require strict background checks and lifetime bans on gun ownership for a class of high risk individuals, with firearms dealers policed as strictly as any dangerous instrumentality, like prescription drugs, aircraft, heavy machinery operation, large watercraft and ship operations and any other life-endangering instrumentality.  You don't need to be a statistician to come up with a list, and people with a history of mental health problems should be at the top of the list, felons already being on it [that's where the background checks come in, and laws against facilitating possession of a firearm to a convicted felon.] 
    I would suggest, however, that the debate focus on the killers, not their weapons. Don't groan just yet — I don't mean to sound "pro-gun" or any kind of apologist for gun violence.  I agree entirely that there is, on balance, no adequate justification for allowing  ownership of high capacity magazine rifles, which fire high velocity, small caliber cartridges [.223, 7.62X39 AK rounds]  designed to incapacitate humans in combat [not necessarily kill]  by tumbling and tearing up the body traveling at up to 4,000 fps  — since this type of firearms are generally not very useful in self-defense, which almost invariably takes place at very close range.   And I fully agree that they should be banned.
    But truth does have a way of getting lost where emotions run high.  The fact is that rifles of all types were, in 2010 responsible for only 358 deaths out of the 30,740 gun related shootings. The rest were pistols.  Moreover, Mr. Stewart also failed to point out who did most of the shooting.  Not crazy people, not felons — ourselves.  Of said 30,470 gun deaths in 2010, 19,392 were suicides [63.6%], 11,078 [36.4%] were homicides committed with pistols.  Assault rifles should banned because they are most effective weapon for crazy people who execute mass killings, not because they are responsible for much more than 1% of gun deaths, since they simply are not. 
     If a felon or attacker is far enough away from you to require that you defend yourself with a high velocity rifle, you should just duck and call the police.  And if he comes through your front door, a handgun will resolve the situation very quickly at the seven yard distance that is the average for most gun fights.  Much farther than that, and a judge is going to ask why you thought your life was in such mortal danger that you were justified in shooting someone.  There is a duty to retreat written into the law.
    I'll conclude by concurring that the "2nd Amendment defense against tyranny"  Constitutional argument has jumped the shark.  No volunteer army of .223-wielding citizens, however "well-regulated" and trained they might be, would last 30 seconds against the machinery of modern warfare.  No tanks, jets or "Spookys" needed — just a few grenade launchers and a single chopper with an XM-218 .50 cal. and it would be over.  No need for Stealth bombers, multiple rocket launchers, Spike man-portable laser-guided missiles or the like.  The debate about protecting "freedom" with small arms is just risible.  The sad fact is that the small caliber, high velocity and high-capacity armament legally sold to Americans is far more effective in taking down tots than tyrants.

  119. HOV/Aug – I see that volume too on Yahoo but TheStreet says just 8.5M for some reason.  They also put a sell on it, citing poor profit margins but on what basis they won't say unless you buy their report (a new and annoying trend).  I love a good volume spike at a line like $6, and they are up from a rough consolidation at $3 earlier in the year and we took the money and ran the first time they broke over $5 so a little consolidation around $6 might get me interested again.  2015 $5s are $1.75 and $5 puts are $1.30 so the buy/write on them is net $2.90/3.95, which is a nice 33% off – even if put to you and makes 72% at $5, which is still a buck down from here so nice cushion.  Still, no dividend so the artificial $3/7 bull call spread is $1.80 and that's offset with the short puts to .50 so net $3.50 on the entry with a break-even at $4.25 so not much of a penalty to the buy/write and you only have a 1x assignment, so more flexible and we're $2.95 in the money to start, which is more than you can make on the buy/write and we don't cap out until we get $4 back with a $3.50 profit at $7 so no reason at all to own the stock here but, on the whole, I'd rather wait to see earnings (and guidance) before getting back in.

    FAS Money/MJJ – We have MS, PGR, FHN and STT this morning and then we will, of course roll.  I expect we flatline at $17 on XLF and FAS is $136.94 at the moment and the Feb $136 calls are $6.20 so an even roll to there or we could do a roll to 2x the $143s and we're good for another $6 move for the month.  Meanwhile, our long XLF calls are gaining (now up $1,850 with $1,000 of the gain offset by the short call losses) and all we're doing is locking in those gains at the moment and keeping protection through earnings (I don't think the 2nd-tier banks will report as well as the TBTFs that have gone so far).  

    I just liked that one. 

    Thanks for chart, StJ.  I'd say the only correlation in that chart is "even countries that boarder America get shot at" 8)

    INTC/Pharm – That's why we're off them this year – doing exactly what we expected on the whole.  People are delusional if they thing INTC can turn that battleship around in a year.  

    SPY/Pharm – People who have $1.6M to spend on a position know just as little as the people who spend $160 on the position.  I'll certainly want to take the opposite bet when they do test $150 on SPY (1,500 SPX) – at least for a quick rejection off that critical resistance.  Look back on a weekly chart at the $130 line (first half of 2011) and the $140 line (last spring) – neither of them ended well.  

    ATF/ZZ – Like most regulatory agencies, it's been gutted to the point of being pointless.  Then, when something bad happens, the GOP calls it "government incompetence" and calls for more cutbacks and "self-regulation".  I agree that we shouldn't fixate on assault weapons – they should be immediately banned completely and utterly and THEN we should talk about banning all guns – especially hand-guns.  One-shot rifles (essentially the same ones intended to be allowed in the constitution) are about the only thing I am flexible on – although Lee Harvey Oswald (or whoever the actual guy was) and various other snipers have demonstrated how much damage can be done with a single shot too.  

    As to the ability of a "well-armed militia" to defend itself – yes, in modern war that's an idiotic notion.  

  120. Phil HPQ
    Without getting further in to quicksand Sold the Jan14 30 straddle 5x 30p for 8.84 now 13.35 and 5x 30c for 1.58 now .17 even rolling down to a 20/25 c/p cost is still 3.51
    Yes there is still .35 premium in the putter
    Rolling cost  to the above net 1755.00
    closing loss 1465.00 net
    I think I gave myself the answer?? TIA

  121. Phil HPQ looking at the 2 year chart HPQ went from Oct11 to Feb12 from 21.25 to 29.85
    There low was in Nov12 11.00 to today 17.11 well over the 100 MAV could they get to 30 again by 14 ?

  122. Good morning!

    China's GDP right in-line at 7.9% (what a shocker) and Asia had a good night but Europe and we are about flat now with a stronger Dollar (79.90) holding us back a bit (up 0.4%):

    4:02 AM Asian and European stocks are uniformly higher after strong housing and labor data out of the U.S. and better-than-expected Chinese GDP, while Japanese shares also rising sharply on continued speculation about how much the BOJ will ease when it holds a policy meeting next week. Japan +2.9%, Hong Kong +1.1%, China +1.4%, India +0.2%. EU Stoxx 50 +0.1%, London +0.3%, Paris+0.2%, Frankfurt +0.1%, Madrid +0.4%, Milan +0.1%.

    6:00 AM Overseas: Japan +2.86%. Hong Kong +1.12%. China+1.41%. India +0.38%. London +0.44%. Paris +0.21%. Frankfurt-0.07%.

    6:06 AM  U.S. stock futures are fairly flattish and apparently not overly excited by China's Q4 GDP beating expectations. German shares, meanwhile, have turned red after being higher earlier. The Chinese data "has the potential to keep the general sentiment upbeat, although the threat of overzealous policy tightening remains a risk," says market strategist Fawad Razaqzada. Dow +0.1%. S&P +0.1%. Nasdaq -0.1%. Crude -0.15% to $95.35. Gold flat at $1690.70.

    Chinese Q4 GDP rises 7.9% Y/Y vs. 7.8% consensus, 7.4% prior. December industrial production +10.3% Y/Y vs. 10.2% consensus. December retail sales +15.2% Y/Y vs. 15.1% consensus.Chart of GDP vs. industrial production over the past 2 years.

    Japanese shares jump in early trading, with the Nikkei Average up 2.2% at 10,844, as the dollar trades around its highest level against the yen since mid-2010. Once again, exporters lead the charge: Mazda (MZDAY.PK +7.6%), Sony (SNE +3.9%), Honda (HMC +2.9%), Advantest(ATE +6.5%) and Tokyo Electron (TOELY.PK). 

    While the yen has weakened sharply over the past few months, Koichi Hamada, an adviser to Japanese PM Shinzo Abe, reckons it still has some way to go. "I think 100 yen (to the dollar) is a good level for Japan, 110 is too weak but 95 or 100 is no problem," Hamada said today. The yen is +0.2% at 89.75 to the dollar.

    The Bank of Japan will reportedly consider making a Fed-like open-ended pledge to purchase assets until it reaches a new inflation target of 2%. At a policy meeting next week, the BOJ is also expected to increase its asset-buying by ¥10T ($112B), and it might discuss halting the 0.1% interest it pays to financial institutions for holding their reserves as it looks to further push down interest rates and weaken the yen.

    Retail sales in the U.K. fell by 0.1% M/M in December, marking the second slowest rate of growth for a December since 1998. Online spending increased 15.5% during the month, with Internet purchases from department stores pacing the gains.

    Describing the oil market as a "crouching tiger, hidden dragon," the International Energy Agency has increased its 2013 consumption outlook by 240,000 bpd to 90.8M bpd. The IEA cited an expected rise in demand from a recovering Chinese economy as a main reason for the new forecast, which comes as OPEC, and Saudi Arabia in particular, cuts production. However, the agency attributed the Saudi reduction to decreased internal consumption and said it's "nothing to worry about." (PR)

    Told you so:  AT&T (T-1.4% AH after disclosing its expects to record a $10B non-cash charge for Q4 related to pension/benefit plan losses. A $12B actuarial loss produced by a lower assumed discount rate is partly offset by a $1.9B asset gain. In October, the telco asked the Department of Labor to let it use $9.5B in preferred equity interest to help cover a pension shortfall that had reached $10.2B at the end of 2011

    More on Capital One (COF): Q4 misses the mark across the board as total revenue declines by 3% Y/Y. The company says the decline was driven by higher levels of estimated uncollectible finance charges and fees in the company's Domestic Card business. Operating expenses also increased by 5% to $2.9B, due to higher year-end expense patterns and somewhat higher integration expenses. Marketing expense increased $77M in the quarter to $393M. Shares -4.2% AH. - Damn, this is why I wanted to short MA, tempting again but they really burned us

    General Electric (GE): Q4 EPS of $0.44 beats by $0.01. Revenue of $39.3B beats by $0.59B. (PR)   More on GE Q4 earnings: Industrial segment organic growth +4% for the quarter, +8% Y/Y. Backlog of equipment and services highest ever at $210B. Immelt: Outlook uncertain for developed markets, "but we are seeing growth in China and the resource-rich countries." Stock repurchases of $2.1B in Q4, $5.2B for 2012. Shares+1.9% premarket. (PR) 

    Boeing (BA) is working with the FAA on interim safety measures so the agency can allow the Dreamliner to start flying again, with government and industry officials hoping this can take place early next week. Meanwhile, the FAA's oversight regime in which plane makers do much of the testing – the agency can't afford to take the lead in this area – before a plane is certified is under scrutiny following the 787's malfunctions and particularly its battery problems. 

    As if Boeing (BA) doesn't have enough to deal with, the Speea union, which represents 23,000 engineers and technical workers at the plane-maker, intends to recommend that its members reject the company's "best-and-final" four-year contract offer in an upcoming vote. Speea is also likely to seek authorization for a strike; the union believes that Boeing's offer puts staff retirement benefits at risk. 

    Sony (SNE +12.2% in Tokyo) has agreed to sell its 37-story U.S. HQ in New York City for $1.1B to a consortium led by real-estate developer The Chetrit Group. Sony will receive net proceeds of $770M after repaying debt and other costs. The sale comes as the company looks to recover from a record loss last year, and it also reportedly wants to sell a $1.1B building in central Tokyo. 

    The inevitable has finally happened and Liberty Media (LMCA) has taken majority control of Sirius XM Radio (SIRI) by increasing its stake to 50.7% after acquiring 50M shares at $3.15 each. Liberty has said in the past that Sirius should improve its technology and expand internationally.

    That's exactly the kind of news we should be flatlining on – fairly mixed.  We're going to need an upside catalyst next week and that's got to be AAPL and GOOG earnings, which is why SQQQ (see $25KPs) is a good hedge.

  123. HPQ/Yodi – Looks like you're already far in the quicksand after letting that go so deep.  Essentially, you already own HPQ at net $19.58, you just haven't admitted it yet.  Actually, considering you started at $30 and your loss is so small at $17.11, it's a testimony to the genius of premium selling.  I agree on the short puts, let them assign you at net $16.70 – why should you pay up to roll?  What you can do, is buy back the dead caller for .17 and trade those for the short Jan (2014) $15s, at $3.50 and that drops your net, if assigned, to $16.25 with the call-away at $15 but of course you'll roll that down the road.  That way, you have nice coverage if HPQ pulls back on earnings (and then you could sell 2015 lower calls while you wait to be assigned) or, if HPQ goes up, the caller loses his $1.50 in premium and you roll them up to the 2015 $20s (now $2.40) for $1 (raising your net to $17.25 and now on a path to profit) and, of course, you'll be thrilled on the short put side.  So you don't need to count on them to get to $30 to get ahead and you don't need to increase your risk.

  124. HPQ Thanks Phil as always excellent suggestion

  125.  nikkei pe 28.1 buy buy

  126. Phil / TZA   The tugboat analogy works, thanks    HPQ  Wow, move an sake – great advice.

    INTC / I read this and just got more ambivalent ? Just stay away ?

  127. Phil // SOP When you short puts that are well ITM – do you close or wait them out ? For example
    BBY March 9's are +.41 and only have .07 left in value, but i would have to wait until March.
    I could just buy them back now for an 85% return and go garden
    or take the .41 and add it to my Jan15 $15

    do you have set strategy for these things ( like always sell at 2X, or whatever or is it case by case )
    In the BBY case, March was Schultz deadline.

  128. wow. what a horse race. i kinda wan tto frame this and put it in my office.
    i didn't  have anything at the Jan$500 but I can just imagine ….